The Fund seeks to provide a steady flow of income by investing primarily in Canadian government and corporate fixed-income instruments and asset-backed securities with maturities of more than one year.
Is this fund right for you?
- You want to protect your money from inflation while also protecting it from large swings in the market.
- You want to invest in government and corporate bonds, as well as other debt securities issued in Canada and around the world.
- You're comfortable with a low level of risk.
Risk Rating
How is the fund invested?
(as of January 31, 2025)
Asset allocation (%)
|
Name |
Percent |
|
Domestic Bonds |
74.9 |
|
Foreign Bonds |
14.2 |
|
Cash and Equivalents |
10.7 |
|
Canadian Equity |
0.1 |
|
US Equity |
0.1 |
Geographic allocation (%)
|
Name |
Percent |
|
Canada |
84.2 |
|
United States |
11.7 |
|
New Zealand |
2.6 |
|
North America |
0.9 |
|
France |
0.2 |
|
Europe |
0.2 |
|
Mexico |
0.1 |
|
Other |
0.1 |
Sector allocation (%)
|
Name |
Percent |
|
Fixed Income |
89.1 |
|
Cash and Cash Equivalent |
10.7 |
|
Consumer Goods |
0.1 |
|
Financial Services |
0.1 |
Growth of $10,000
(since inception)
Data not available based on date of inception
Fund details
(as of January 31, 2025)
| Top holdings |
% |
| Cash and Cash Equivalents |
5.6 |
| Canada Government 3.00% 01-Jun-2034 |
4.0 |
| Quebec Province 4.40% 01-Dec-2055 |
2.9 |
| Canada Government 2.75% 01-Dec-2055 |
2.8 |
| United States Treasury 2.13% 15-Feb-2054 |
2.3 |
| Quebec Province 4.20% 01-Dec-2057 |
2.3 |
| Ontario Province 3.80% 02-Dec-2034 |
2.2 |
| Canada Government 3.25% 01-Dec-2034 |
1.9 |
| Ontario Province 4.60% 02-Dec-2055 |
1.7 |
| Canada Housing Trust No 1 1.25% 15-Jun-2026 |
1.6 |
| Total allocation in top holdings |
27.3 |
| Portfolio characteristics |
|
| Standard deviation |
6.0% |
| Yield to maturity |
4.2% |
| Duration (years) |
7.6 |
| Coupon |
4.1% |
| Average credit rating |
A+ |
Understanding returns
Annual compound returns (%)
| 1 MO |
3 MO |
YTD |
1 YR |
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| 3 YR |
5 YR |
10 YR |
INCEPTION |
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Calendar year returns (%)
|
2024 |
2023 |
2022 |
2021 |
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|
2020 |
2019 |
2018 |
2017 |
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Range of returns over five years
(November 1, 2018 - April 30, 2025)
| Best return |
Best period end date |
Worst return |
Worst period end date |
|
0.4% |
Dec. 2023 |
-1.0% |
Apri 2024 |
| Average return |
% of periods with positive returns |
Number of positive periods |
Number of negative periods |
|
-0.3% |
21.1% |
4 |
15 |
Q4 2024 Fund Commentary
Market commentary
U.S. political events were the primary focus of fixed income markets during the fourth quarter of 2024. Following the U.S. presidential election, investors switched focus to the incoming administration’s potential policies, particularly deficit spending and tariffs.
Canada and the U.S. continued to face different economic situations. Long-term Canadian bond yields rose with U.S. yields. However, short-term Canadian yields remained unchanged, despite the Bank of Canada’s (BoC) continued interest-rate cuts to reduce its policy rate to 3.25%. The BoC reduced rates by 50 basis points (bps) in October and again in December.
In December, BoC policymakers signalled that further 50-bp rate cuts were less likely. Markets expected future rate-cut decisions to be dependent on U.S. policy actions from the new administration.
Performance
The Fund’s shorter-than-benchmark duration (lower sensitivity to interest rates) had a positive impact on performance as yields rose. Security selection among corporate bonds also had a positive impact.
At the security level, overweight exposure to an Enbridge Inc. (5.37%, 2077/09/27) hybrid bond had the most positive impact on performance. The small group of hybrid bonds in the Canadian market generally have good asset coverage because of their long-term regulated infrastructure assets. Also, Enbridge Inc.’s strong balance sheet and an encouraging interest-rate environment supported performance.
The Fund’s allocation to maturities across the yield curve had a negative impact on performance as the curve steepened (meaning long-term yields rose more quickly than short-term yields). Inflation concerns and more cautious views on U.S. interest-rate cuts led to higher yields and downward pressure on longer-term bonds.
At the security level, relative exposure to Government of Canada (2.75%, 2055/12/01) had the most negative impact on performance. Yields at the long-term end of the curve increased, which put pressure on bond prices and led to the underperformance of long-term government bonds.
The sub-advisor added Government of New Zealand (3.5%, 2033/04/14), a Local Government Funding Agency (LGFA) bond, to the Fund. The LGFA funds most local governments in New Zealand and is a leader in issuing green and sustainable bonds.
The sub-advisor increased exposure to Enbridge Inc. (5.37%, 2077/09/27) based on the value offered by the Canadian-dollar hybrid market. The sub-advisor believes this market provides an opportunity for non-investment-grade type yields in investment-grade companies, through investment in the junior parts of the capital structure. The sub-advisor is also confident in Enbridge Inc.’s business and attractive return potential.
The sub-advisor decreased Province of Alberta (3.10%, 2050/06/01) to align the Fund’s duration with its asset allocation objectives.
Outlook
The sub-advisor believes the path of interest rates at the longer-term end of the yield curve remains uncertain. Canadian 30-year bond yields were 150 bps lower than their U.S. counterpart.
At current valuations, the sub-advisor considers the corporate bond market expensive. Positive fund flows and higher yields could make them even more expensive, in the sub-advisor’s view.
As such, the sub-advisor doesn’t expect to increase the Fund’s exposure to corporate bonds. Instead, the sub-advisor intends to focus on improving credit quality and liquidity.